Buying Your First Home

1. get the facts
your first
h o m e

2. 4 steps to you r
first hom e

3. your first home
Congratulations! You are thinking of buying your first home. You are about to enter a wonderful
new chapter in your life that we know can be both exciting and scary. Many first-time home buyers
will contemplate the decision for years before taking any action, even a first step. This brochure
helps you to take that first step.
Once you purchase a home, you will soon reap the tax advantages of home ownership and the
opportunity to build equity (or wealth) over time. According to the Federal Reserve, the median
household wealth accumulation for a homeowner was $184,000; in comparison, the median net
worth of a renter was $4,000. It’s time to start taking those steps!
Step 1
Find the Right Help to Find the Right Home
Step 2
Get Qualified for a Loan and Find Out How Much Home You Can Afford
Step 3
Work with Your R e a lt o r ® to Find the Right Home and Make an Offer
Step 4
What to Do Next – A Checklist
3

4. get the facts
Step 1
Find the right help to find the right home
You’ve probably already been using the Internet to search for homes, financing options, and home-
buying information. You will find many of those resource links included in this brochure. We also
encourage you to contact a John L. Scott Residential Specialist at the very beginning of your
quest and put that John L. Scott Residential Specialist to work for you. John L. Scott Residential
Specialists are Realtors® and subscribe to the Realtor® code of ethics. He or she will help you find
what you are looking for in a home, in the area you want, and at a price you can afford. When
you find a home that you want to make an offer on, your John L. Scott Residential Specialist will
research the market and let you know if the price is fair. He or she can help you negotiate an offer
and advocate on your behalf throughout the process.
A John L. Scott Residential Specialist can help take the mystery out of the purchase of your new
home and show you the ropes. There are hundreds of little details in buying a home, and some
details that are not so little—like property lines, easements, earnest money, and the time allowed
for home inspections (to name a few). Don’t worry, you will be involved throughout the process
and if you have any questions along the way, do not hesitate to ask
your John L. Scott Residential Specialist
F i n d t h e r i g h t R e a lt o r ®
You may already be working with a trusted real estate agent/broker.
If you aren’t, take the time to find the right Realtor® to meet your
needs. Ask family, trusted friends and coworkers for Realtors® with
whom they have worked and would recommend.
Learn about the market
Every market in the Northwest is a little different but, in general, now is an excellent time to
purchase your first home if you find the right home at a fair price. At the time of this printing,
interest rates on fixed-rate mortgages are near historic lows. If you want to know what a
percentage rate can do to a monthly payment, go to johnlscott.com and follow the mortgage links
to the mortgage calculator and plug in some numbers. You will be amazed. The real estate market
is a much more balanced market today with buyers finding many more properties from which to
choose. That wasn’t the case over the past few years. Greater selection means the chances are
better you will find the right home for you with the amenities you are looking for.
4

5. your first home
Where are we in the real estate cycle?
That is the big question, isn’t it? We all want to make sure we are getting the best deal, so we’re
all trying to time the market. What makes that difficult is that the bottom is generally only visible
once we are climbing out of it. That said, we project that housing in the Pacific Northwest will soon
be seeing an upswing. Here is why:
• In general, the Pacific Northwest has a very strong economy and we are projected to add
more than two million residents in the next 12 years.
• The Northwest has fewer subprime loans in danger of foreclosure so, unlike what is
happening in some states, we have many fewer “distress sales” or foreclosures.
• Historic low interest rates and tax credit incentives are turning the market around. If you
are renting, you are not alone. There are thousands of people just like you who want to
buy a home and are just waiting to see what the market is going to do. As these people
enter the market, supply will go down and the market will heat up, especially in the more
affordable price ranges (under the median/midpoint).
Median Price of Single Family Homes
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD
2008
Idaho Oregon Washington U.S.
Source: Federal Housing Finance Board Monthly Survey
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6. get the facts
Step 2
Get Qualified for a Loan and Find Out How Much Home You Can Afford
This is another one of those “first steps” you need to take. It costs little or nothing to determine if
you can buy a home right now and the price range in which you should be looking. Most first-time
home buyers are surprised at what they learn and wish they had started the process a long time
ago. Your John L. Scott Residential Specialist will help you find a reliable loan officer.
Do you have enough money to buy a home?
If you have saved some money for a down payment and you anticipate living in that home or
condominium for three to five years, the answer is almost always yes. It is time for you to start
building your own wealth instead of contributing to somebody else’s with your rent payments. In
most cases, the interest portion of your mortgage payment and your property tax payments are tax
deductible. There are also valuable financial assistance programs for first-time home buyers.
Appreciation of Stocks vs. Real Estate
$10,000 down payment on a $200,000 home
Now 10 years from now
$150,000
$110,300
$100,000
$35,200
$50,000 $23,600
$10,000 $10,000 $10,000
$0
Stock Market Stock Market Homeowner
(normal market) (bull market) (normal market)
Source: National Association of REALTORS®
Ta x c r e d i t s a n d o t h e r b e n e f i t s
Thanks to legislation passed early in 2009, first-time home buyers and those who have not owned
a residence in the last three years are eligible for up to an $8,000 tax credit. This credit does not
require repayment, though some conditions do apply. The full $8,000 is available to individuals
with an adjusted gross income of no more than $75,000 or joint filers making no more than
$150,000. The credit applies to home purchases closed January 1, 2009 through
November 30, 2009.
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7. T h e r e a r e m a n y p r o g r ams
a v a i l a b l e t o a s s i s t f i r s t t ime
h o m e b u y ers.
Another provision of the Act allows a tax deduction of up to $500 ($1,000 for joint filers) for
people who take the standard deduction. Many homeowners use the standard deduction ($5,350
or $10,700 for joint filers in 2008), rather than itemizing, because it is more than the mortgage
interest they could deduct. Be sure to check with your tax professional.
Recent changes in FHA loan limits have expanded the number of people and properties that
qualify. In some cases, you can get an FHA loan for as little as 3.5 % down.
Many first-time home buyers don’t realize you can also use up to $10,000 from your IRA to
purchase your first home. In many cases, you can use gifts or loans from family members as long
as you disclose this information to the lender. The federal government knows that first-time home
buyers are good for the local and national economy.
Lenders look at three things when you apply for a mortgage: your debt-to-income ratio, your down
payment, and your credit score. If you pay your bills on time, do not carry a lot of debt, and have
a down payment needed for the loan program, you will be fine. Getting prequalified by your lender
is an important first step in actually starting to look for your first home, and you will have real
negotiating power when you do find the right home. If you don’t quite qualify, your mortgage expert
should be able to suggest a plan with steps that will lead to qualification over a period of months.
Your John L. Scott Residential Specialist will help you to find a qualified mortgage consultant who
7

8. A knowledgeable
expert will help can discuss your loan options with you.
Step 3
you prepare the Work with Your R e a lt o r ®
best deal and to Find the Right Home and Make
an Offer
avoid delays Well, this is a giant step isn’t it? By now,
or costly mistakes. you know how much you should spend
on a home. Your John L. Scott Residential
Specialist will help you to find the best
home that is within your budget and
meets your needs. Using your Residential
Specialist’s market knowledge and
negotiating skills, together you will craft
a written offer that details the amount
of the offer and the conditions of the
sale. If the seller “counters” your offer,
your Residential Specialist may need
to negotiate until you both agree to the
terms of the sale. Your John L. Scott
Residential Specialist can advocate on
your behalf at your direction during these
negotiations. You will be very much a part
of all the decisions, and your questions
will be welcomed.
Step 4
What to Do Next – A Checklist
There is still a lot of work to do after your offer is accepted. Your Residential Specialist can guide
you through the process. Among the next steps:
Get a home inspection
Many offers are made contingent on a home inspection. You and your Residential Specialist should
8

9. your first home
have agreed on a reasonable length of time for the inspection and include it into the offer. An
inspection will tell you about the condition of the home and can help you avoid buying a home that
needs major repairs, or help you negotiate with the seller to have the repairs made before you buy
the home.
S h o p f o r h o m e o w n e r ’s i n s u r a n c e
Lenders require homeowner’s insurance to cover the collateral for the loan (the home). Consult
with your John L. Scott Residential Specialist if you have questions.
Complete the paperwork necessary to close your loan
Your loan officer can advise you as to exactly what is needed.
Don’t forget to sign up for utilities!
You want to be sure that the lights come on and water flows from the faucets when you move
into your new home. Go to the Our Services tab on johnlscott.com, then click on Home Services.
You can connect essential home services online for no additional fee as well as compare service
providers for telephones and high-speed internet connections.
Complete the transaction
You are now ready to complete the transaction. This is also called “settlement” or “closing.”
Closing is where you need to read and understand the documents you are signing. Ask if you
don’t understand any part of the document. There are no dumb
questions when it comes to a purchase of this size.
At Last
Before you know
it, you will have
completed all
the items on your
checklist and it
will be moving day.
Congratulations! You are
now a proud homeowner
with a place to call your own.
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10. get the facts
Resour ces
The following resources are more than links to information, they are sources for low interest loans
for many household incomes.
Federal Housing Administration (FHA)
www.fhainfo.com
FHA operates within HUD and has the primary responsibility for administering the government
home loan insurance program. This program allows a first time home buyer, who might otherwise
not qualify for a home loan, to obtain one because the risk is removed from the lender from FHA
who insures the loan for the lender.
Most first time
home buyers are
surprised a t wha t
the y learn and
wish the y started
the process a long
time a go.

11. US Departmentof Housing
and Urban Development
(HUD)
www.hud.gov
This is where you will find valuable leads and
information about all federal programs that
assist first time home buyers, including FHA,
Fannie Mae and Freddie Mac.
US Department of
Agriculture Rural
Development loan
programs
www.rurdev.usda.gov/wa/housing.
htm
Yo u r John
These programs are for rural development
and you may qualify.
L . S cott
Habitat for Humanity
R e s i d e ntial
www.habitat.org/cd/local
S p e c i alist
c a n a d v o ca te
o n your
b e half.
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12. Not all real estate practitioners are RealtoRs®. The term RealtoR® is a registered
trademark that identifies a real estate professional who is a member of the National
Association of RealtoRs® and subscribes to its strict Code of Ethics. Here are nine
reasons why it pays to work with a RealtoR®.
1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure
forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements.
A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.
2. Get objective information and opinions. realtors® can provide local community information on utilities,
zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional
will be able to help you answer these two important questions: Will the property provide the environment I want for
a home or investment? Second, will the property have resale value when I am ready to sell?
3. Find the best property out there. Sometimes the property you are seeking is available but not actively
advertised in the market, and it will take some investigation by your realtor® to find all available properties.
4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to
price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In
addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and
investigations of the property before you are bound to complete the purchase. Your agent can advise you as to
which investigations and inspections are recommended or required.
5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real
estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family.
When a property is marketed with the help of a realtor®, you do not have to allow strangers into your home. Your
realtor® will generally prescreen and accompany qualified prospects through your property.
6. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s
important to work with a professional who is immersed in the industry and knows the real estate language.
7. RealtoRs® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a
few years in between each purchase. And even if you’ve done it before, laws and regulations change. realtors®,
on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on
your side is critical.
8. Ethical treatment. Every member of the National Association of realtors® makes a commitment to adhere to a
strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a realtor®,
you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for realtors® to take
the Code of Ethics orientation and they are also required to complete a refresher course every four years.
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